Central bank purchases of government bonds are not bailouts and do not automatically cause inflation, since they only change the composition of the consolidated government's liabilities, not their total.

Subjectsinflation quantitative easing interest rates government

What this subject means

government What states are for and what they are worse at than markets and networks: legitimacy, moral hazard, and who may be entrusted with power.

On the topicDoes public debt cost what we think it does?

What Olivier Blanchard actually said

Olivier Blanchard 1 Jun 2022 Economist; former chief economist of the International Monetary Fund

Governments have not been bailed out by their central banks. As I discussed earlier, central bank intervention does not reduce the overall liabilities of the consolidated government, just their composition. And it does not automatically lead to more inflation: It increases the size of the balance sheet of the central bank, but it does not increase the size of the non-interest-paying money stock.

Where this was said

↗Fiscal Policy under Low Interest Ratesdirect.mit.edu

1 Jun 2022

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